Persuasion and Timing in Asymmetric-Information All-pay Auction Contests

90 Pages Posted: 6 May 2022 Last revised: 7 Jul 2022

See all articles by Jian Chen

Jian Chen

Tsinghua University - School of Economics and Management

Zhonghong Kuang

Renmin University of China - School of Economics

Jie Zheng

Shandong University - Center for Economic Research

Date Written: August 31, 2017

Abstract

In a two-player all-pay auction contest with one-sided asymmetric information, we completely characterize the designer's optimal Bayesian persuasion signal for all orders of moves considered. Effective partial disclosure strategies can be divided into three categories (Threat, Fluke, and Harmony), corresponding to three distinct insights for heating up the contest. We further allow the designer to decide on contestants' order of moves in addition to the information disclosure decision. The optimal timing scheme requires the player with a relatively higher winning value to move first, except when two players' winning valuations are close enough in which case the simultaneous move is optimal.

Keywords: All-pay Auction; Bayes Nash Equilibrium; Information Disclosure; Bayesian Persuasion; Timing

JEL Classification: C72, D72, D82

Suggested Citation

Chen, Jian and Kuang, Zhonghong and Zheng, Jie, Persuasion and Timing in Asymmetric-Information All-pay Auction Contests (August 31, 2017). Available at SSRN: https://ssrn.com/abstract=4099339 or http://dx.doi.org/10.2139/ssrn.4099339

Jian Chen

Tsinghua University - School of Economics and Management ( email )

Beijing, 100084
China

Zhonghong Kuang

Renmin University of China - School of Economics ( email )

No. 59, Zhongguancun Street
Beijing, Beijing 100872
China

Jie Zheng (Contact Author)

Shandong University - Center for Economic Research ( email )

Jinan, Shandong 250100
China

HOME PAGE: http://https://meetecon.com/jie/

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